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HMO vs PPO: What's the Difference?

When choosing a health-care plan, make sure to do your homework on the options available so you can make an informed decision. Learn the difference between an HMO (Health Maintenance Organization) and a PPO (Preferred Provider Organization) and decide which type of coverage is most beneficial for you and your family.

A Health Maintenance Organization (HMO) is a type of managed care health plan where members choose their physician from a list of approved health care providers which typically results in lower premiums and/or copayments. Generally, members of an HMO can only see a health care specialist (obstetrician, cardiologist, rheumatologist) if they get a referral from their primary care physician, also known as a gatekeeper. Your primary care physician serves as your health care advocate and will help you find the best treatment for physical and mental health problems you might face. HMOs tend to provide the least expensive medical coverage and a minimum amount of paper work. However, your choice of physicians may be more limited.

The benefits of a Health Maintenance Organization (HMO) can differ depending on the company and group plan. Your HMO may cover health screenings, cancer screening, preventive care, immunizations, laboratory tests, X-rays and other scans, prescribed medications, surgical treatments and more. In addition, HMOs usually cover prenatal care and well-baby care. Make sure you understand the specific benefits offered by your HMO policy and ask questions if you are confused or unsure about the HMO's benefits. Be sure to review the Summary Plan Description (SPD), which is the part of the HMO policy that outlines the different benefits provided.